edge init

This is a discussion on edge init within the First Steps forums, part of the Reception category; Originally Posted by darktone I dont believe you can have a physical/technical edge in the market (unless of course you ...

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Old Jun 26, 2012, 6:34pm   #17
 
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Re: edge init

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Originally Posted by darktone View Post
I dont believe you can have a physical/technical edge in the market (unless of course you have some inside info). I know that far smarter / more driven / better capitalized folks than me can see exactly what i can on a screen.
I believe the only real edge you can have is psychological. For me i guess that means to be calm when most feel pressure. To be patient, unhurried, uncaring,unknowing,accepting. Maybe most importantly flexible.

If roulette payed 37 for 36 id be a player!
that's interesting. So do you believe it is possible to be profitable without a trading edge? for example trading purely from the gut? or maybe the gut is the edge?
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Old Jun 26, 2012, 6:39pm   #18
 
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Re: edge init

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Originally Posted by ChocolateDigestive View Post
been a while since i thumbed through street smarts, do you rate her?
well, it was her "holy grail" set-up that changed my life!
I was always wary of detecting a trend-change, but the holy-grail or sling-shot technique was all about not having to predict a trend, but to simply trade a pullback, or slingshot, into an already existing trend.

Just about ALL of my rules since have been variants of the sling-shot.
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Old Jun 26, 2012, 6:44pm   #19
 
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Re: edge init

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Originally Posted by ChocolateDigestive View Post
careful the 'set up' police will be on your tail soon! lol.

You raise a good point about luck, last month I happened across a black swan event that went in my favour. I lucked out and cashed out. Sometimes luck can be bad for you, give you false hope in your 'edge'.
Aye, you don't want to ride your luck too much. Probably safer to write a book (or worse ) about the spectacular success of your "method".
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Old Jun 26, 2012, 6:51pm   #20
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Re: edge init

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Originally Posted by BeginnerJoe View Post
One taboo subject I find interesting is that no one ever talk about the edge the market has over you. My estimation tells me that this market edge is significantly greater than that of the casino for most (i.e 99%+) tarders.
If you read my posts, you'd know this is a subject that I'm constantly discussing

You'd also understand why I advocate using random trades as part of the methodology when designing an edge.

I can tell you precisely what the market edge is for a number of markets, across a range of time-frames and trade durations. That's arguably the first step of designing an edge knowing what you have to overcome.

I've even see this being discussed quite recently on public domain trading sites, and I've even seen people quantifying that edge It might not be discussed at the zoo, but it is discussed amongst traders quite openly

On top of the mechanical edge working against you, there's definitely some psychology at play too. I have yet to find a new trader who can outperform a random system based on coin tosses
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Old Jun 26, 2012, 7:03pm   #21
 
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Re: edge init

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Originally Posted by ChocolateDigestive View Post
that's interesting. So do you believe it is possible to be profitable without a trading edge? for example trading purely from the gut? or maybe the gut is the edge?
Depends what you mean by gut i guess. If you mean "The bottom is in here i can feel it! im buying" type stuff. Maybe for some, but ive never really been able to do it.
When i talk about edge being psychological i mean more towards how you enter and exit. Two traders can see the trend in a technical way but aim to enter enter and exit (at profit or loss) in different ways. ie maybe one could take a break out with a set stop, the other could take a limit in and out. They both have the same technical view of things but have different attitudes towards risk. I could be wrong but currently thats the only real place i can see anything like an edge.
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Old Jun 26, 2012, 7:06pm   #22
 
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Re: edge init

my definition below and what I believ emy own edge to be is an extension olnthe Mark Douglas definition.

A Trading Edge is a repeating circumstance or set of circumstances (ie a repeating set-up or repeating combination of set-ups) that suggest a greater probability of price moving one way over another within your stop - based on a large sample historical precedent. Additionally and/or alternatively; if the edge does not suggest a greater probability of this one outcome over another, then based on the large sample historical precedent, it suggests that more gain is available when that outcome occurs than when it doesn't - sufficient to realise a net gain over any given future sample.

An earlier poster suggested that they thought that their psychological skills gave them an edge/improved their edge and I certainly concur with this - others may have just such a gut feeling edge as the OP suggested but for most the psycholgical skills can enhance an edge.

As for validation of an edge - any forward test has to resemble the back test metrics and then 2 further forward tests of the same type may be a good start before committing live money.

G/L
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Old Jun 26, 2012, 7:08pm   #23
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Re: edge init

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Originally Posted by the hare View Post
If you read my posts, you'd know this is a subject that I'm constantly discussing
I just assumed your posts were about Baghdaddy and didn't pay too much attention.


Quote:
Originally Posted by the hare View Post
You'd also understand why I advocate using random trades as part of the methodology when designing an edge.

I can tell you precisely what the market edge is for a number of markets, across a range of time-frames and trade durations. That's arguably the first step of designing an edge knowing what you have to overcome.

I've even see this being discussed quite recently on public domain trading sites, and I've even seen people quantifying that edge It might not be discussed at the zoo, but it is discussed amongst traders quite openly

On top of the mechanical edge working against you, there's definitely some psychology at play too. I have yet to find a new trader who can outperform a random system based on coin tosses
You know random technique works. But I am one step further than you and know why random technique works - in a liquid market of course. In a flat market, neither coin toss nor tossing the noob would work.
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Old Jun 26, 2012, 7:24pm   #24
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Re: edge init

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You know random technique works. But I am one step further than you and know why random technique works - in a liquid market of course. In a flat market, neither coin toss nor tossing the noob would work.
I can assure you, I've been doing this for a very long time, and working with some very smart people, and I know exactly why my edge works

if you don't believe me, check out dr zuppys old posts from back in the day when he was still prepared to let cats out of bags.
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